How Samsung Became An Industry Giant

If you're just joining us, you're listening to WEEKENDS on ALL THINGS CONSIDERED from NPR News. I'm Laura Sullivan.

Quick trivia question: Name a global superpower technology company, that is the world's biggest seller of smartphones headed by a charismatic CEO surrounded by a cult of personality. I'm guessing most of you just said Apple, right? You would be wrong. The answer is Samsung.

Bloomberg journalist Sam Grobart gained access to the South Korean company's facilities and wrote about his experiences for Bloomberg Businessweek.

Sam Grobart is here with us to share some of the most surprising things he found during his trip to Seoul. Welcome, and thanks for joining us.

SAM GROBART: It's great to be here, Laura.

SULLIVAN: Samsung is really more than smartphones, which might surprise some Americans. How does it intersect with the daily lives of, say, someone living in South Korea?

GROBART: Well, it intersects in almost every way. If you live in Seoul, you may have been born at the Samsung Medical Center. And you may be brought home to your apartment building, which was built by Samsung's construction division. And perhaps you're put into a crib, which came over from China on a cargo ship that Samsung built. And you're watching a Samsung TV when you're a little older, and you're seeing advertisements on that TV that were created by Samsung's advertising agency perhaps for Samsung Life, one of the world's largest life insurance companies. And you're wearing some clothes from Bean Pole, which is also a division of Samsung.

SULLIVAN: Wow.

GROBART: And you go to your Samsung refrigerator and so on and so forth.

SULLIVAN: Wow. In terms of South Korea, this must be an enormous chunk of their GDP.

GROBART: Approximately 20 percent.

SULLIVAN: Wow. From one company.

GROBART: From one company.

SULLIVAN: So this is a company that's really driven by its CEO, a man named Lee Kun Hee. Tell me about him.

GROBART: So Chairman Lee is the son of the founder of Samsung. And it's under his administration that it has really grown to these stratospheric heights.

SULLIVAN: So take us back to 1993.

GROBART: Yeah.

SULLIVAN: Chairman Lee Kun-Hee walks into a California store that sells televisions, and he sees a Samsung television on the bottom shelf in the far back.

GROBART: Yes. According to, sort of, corporate lore, that was the moment when he decided that he needed to make it into a world player. And he decides he needs to summon his top executives - come to Frankfurt - and they proceed to sit in a room where he lays out his strategy for the company. And this lasts three days. When you're visiting the human resources development center in Yongin, which is outside of Seoul, you come upon this recreation of that room, and all of the items within it have been taken from the hotel in Germany and reassembled in Korea.

SULLIVAN: Is that a bit unusual?

GROBART: Oh, I would say it's very unusual.

SULLIVAN: What's the work culture like?

GROBART: Constant efficiency, constant improvement. There's none of the sort of highly creative, you know, hey, do what you want to do, man, and I'm sure it's going to work out. It's, no, no, you're going to build those smartphones right now, and you're going to make sure that they are perfect.

SULLIVAN: Whatever it is that they're doing seems to be working because as you write, the Galaxy smartphone that they produce is now outselling the iPhone.

GROBART: Yes, that's - that is happening globally. So Samsung now outsells Apple in smartphones. It outsells Nokia in all mobile phones. And they show no sign of stopping.

SULLIVAN: How did they break into the smartphone market?

GROBART: So what they do is they start by building a component for an overall device. Obviously, there's been a lot of patent law disputes between Samsung and Apple and many other companies are involved in that. But somebody does need to supply these components. So Samsung, actually, builds the microprocessor that is in the iPhone. And in doing so, they're able to gain an understanding of how that market works, and then they start building devices themselves. So if Apple comes along in 2009 and says we need you to build a quad-core microprocessor, well, someone in Samsung is going to ask why.

SULLIVAN: Why do they need a quad-core processor?

GROBART: Why do they need that? What are they doing with that? Oh. And since they can see that far down the road, perhaps they would like to start building something like that. They have an advantage that almost no other company has. At some level, there is a strategic advantage to knowing what people want.

SULLIVAN: Sam Grobart is a writer for Bloomberg, and his article "How Samsung Became the World's Number One Smartphone Maker" is in the latest edition of Bloomberg BusinessWeek. Sam, thanks so much for joining us.